Reserve Bank of Fiji 24 January 217 FIJI ECONOMY - Recent Economic Developments
Developments in the International Economy that would impact on Fiji s Economy? Global growth/us/china Trading partner performances Commodity price movements Major currency changes Geopolitical tensions Policy uncertainty (tighter monetary stances, protectionist trade policies, etc.)
WORLD GDP GROWTH % Forecast @ July '16 7. 6. 5. 4. 3.2 3.1 3.4 3.4 3. 3.1 3.1 2. 1.. 24 25 26 27 28 29 21 211 212 213 214 215 216f217f Sources: IMF World Economic Outlook July/October 216 Global growth forecast this year is stronger than that for 216, with upward biases provided by the US and China. The outlook for advanced economies has improved, reflecting rebound in second-half activity last year for the US, Euro zone, the UK. Weaker prospects for emerging market and developing economies, particularly India and Brazil. Deviation from this central forecast driven by policy uncertainty around the policy stance of the incoming US administration and its impact. Sources: IMF World Economic Outlook Update Jan 217
% TRADING PARTNERS OUTLOOK Positive growth momentum 216e 217f 218f 6. 4. 2.3 2.3 2.4 2.5 3.2 3.1 2.8 2.9 2. 1.6 1.6 1.4 1.5.9 1.1.9. United States Eurozone Japan Australia New Zealand Sources: January 217 Consensus Forecast and Asia Pacific Consensus Forecasts
ASIA S ECONOMIC OUTLOOK 1 % Growth prospects weaker 6.7 6.8 6.4 6.1 7.5 7.7 5 4.1 4.2 4.4 3.2 3.1 3.2 2.7 2.5 2.5 1.9 2. 1.5 1.6 1.5 1.5 China India Thailand Malaysia Korea Hong Kong Singapore Sources: January 217 Consensus Forecast and Asia Pacific Consensus Forecasts
COMMODITIES - Recent Developments Agreement by OPEC and non- OPEC members on oil supply Oil production in the US Increased demand by China Other supply related factors
IMPORT COMMODITY PRICES FAO Food Price Index Index 3 25 MOM -.1% YOY 12.% 2 15 1 5 Dec-8 Dec-9 Dec-1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 US$/barrel Brent Crude Oil Prices Source: Global Food Price Monitor December, 216 14 12 1 WM 23/1 US55.68cents/barrel 8 Current futures 6 57.3 57.3 57.6 4 2 211 212 213 214 215 216 217 Source: Bloomberg
EXPORT COMMODITY PRICES cents/lb 3 2 World Market Sugar Prices (New York) WM 2/1 US2.22 cents/pound Current Futures 1 211 213 215 217 Sources: Bloomberg $/oz 2, 1, Gold Prices (End of Month) WM 2/1 US$1,2.6 /fine ounce Current Futures 211 213 215 217 Source: Bloomberg
THE DOMESTIC ECONOMY Recent developments TC Winston and Zena (Feb/Apr16) TD4F (Dec16) Lower than forecast tourist arrivals Lower than forecast remittances Pick up in commodity prices Delayed reconstruction /supply shortages
GDP GROWTH Reduced growth prospects % Actual May-16 Forecast Oct-16 Forecast 6. 5. 4. 3. 2.4 3.6 3.2 3. 3. 2. 2. 1.. -1. -2. 26 27 28 Gene 29 Mick 21 Tomas 211 212 Evan 213 214r 215p 216f Winston TD4F 217f 218f 219f Sources: Fiji Bureau of Statistics & Macroeconomic Committee
.8.6.4 Sector contribution to Estimated Growth in 216 Agriculture, manufacturing, forestry, fishing and water sectors are expected to decline. % @ Oct16 @ May 16 +2.4% +2.% Primary Industry Services.2. -.2 -.1 -.3 -.99.36.5.4 -.12.61.51.43.34.3.13.12.11.13 -.4 -.6 -.8-1. -1.2 FISH FORESTRY AGRI CONS MINING ELECT & WATER MANU TRANS WH & RETAIL PUB ADMIN ACCOM FINANCIAL INFO & COM PROF EDU OTHER SER Source: Macroeconomic Committee
.6.5 Sector contribution to Projected Growth in 217 Broad based growth is expected in 217 slight downward bias following TD4F % @ Oct16 @ May 16 +3.6% +3.6% Primary Industry Services.4.3.2.1..31.2.1.56.33.4.1.39.37.37.32.2.15.15.9.14 AGRI FISH FORESTRY MANU CONS MINING ELEC & WATER FINANCIAL TRANS WH & RETAIL ACCOM INFO & COM PUB ADMIN EDU PROF OTHER SER Source: Macroeconomic Committee
AGGREGATE DEMAND Consumption indicators remain firm Investment trends are positive Fiscal measures are targeted at rebuilding the economy
BANKS NEW CONSUMPTION LOANS, NOV New consumption credit growth has slightly picked F$M 9 8 7 Private Individuals (Others) WRHR Y-o-Y (rhs) 73 719 814 % 7 6 5 6 4 5 3 4 2 3 2 61.2 2.3 13.2 1 1-1 26 27 28 29 21 211 212 213 214 215 216-2 From March 214 HFC lending is included in Commercial Banks lending. Source: Reserve Bank of Fiji
4, NEW VEHICLES SALES No. Annual Jan-Oct 3, 2, -15.9% -14.% 28.8% 1, 21 211 212 213 214 215 216 Note: Effective 212, New Vehicle Sales data inclusive of data from Vision Motors Sources: Fiji Motor Traders Association and Vision Motors
VEHICLES REGISTRATION Jan-Nov No. New Vehicles Secondhand Vehicles 14, 12, 1, 8, 6, 4, 2, 44.5% -1.4% 9.2% 32.% 21 211 212 213 214 215 216 Source: Land Transport Authority
NET VAT COLLECTIONS F$M 1, Annual Jan-Oct 12.4% 8 9.9% 6-26.% 4 2 21 211 212 213 214 215 216 Source: Fiji Revenue & Customs Authority
RBF RETAIL SALES SURVEY Annual Percent Change % Dec-15 Jun-16 15 1 8.3 8.5 7.6 7.7 5 21 211 212 213 214 215 216f Source: Reserve Bank of Fiji
BANKS NEW INVESTMENT LOANS, NOV New investment credit growth has been negative since January 216 F$M % 5 Building & Construction Real Estate Y-o-Y (rhs) 462 2 45 41 4 15 35 3 25 241 198 91.7 23 1 5 2 15 1 5 9.5-11.2 264 27 26 27 28 29 21 211 212 213 214 215 216-5 -1 From March 214 HFC lending is included in Commercial Banks lending. Source: Reserve Bank of Fiji
DOMESTIC CEMENT SALES Annual TONNES 2 42.2% 11.1% 15 1 5 21 211 212 213 214 215 216 * Cement production data inclusive of data from Tengy Cement (Fiji) Company Limited effective March 214 Sources: Pacific Cement Ltd and Tengy Cement (Fiji) Company Limited
OET MAJOR PAYMENTS SECTORAL CONTRIBUTIONS % Jan- Dec 216: +8.3% 4. 3.1 Merchandise: +6.2% 2.3 1.8 2. 1.5 1.4.9.6.3.2. -.1 -.2 -.2-2. -.9-2.3-4. Transport Equipment Duty Free Goods Unrequitted Transfers Food,Beverages & Tobacco Machinery & Elec. Equip Overseas Investment Income Travel Chemicals TCF Other Imports Merchanted Goods Government Imports Raw Materials Mineral Fuels Source: OET
No. 2, BUILDING PERMITS Jan-Sept Number of Permits Annual Value of Permits (Jan-Jun) F$M 5 1,5 1, 6.7% 6.3% 2.1% 12.7% 4 3 2 5 1 21 211 212 213 214 215r 216p Source: Fiji Bureau of Statistics
TOTAL VALUE OF WORK PUT-IN-PLACE F$M Annual Jan-Sept 5 12.4% 4 3 11.4% 1.5% 2 1 21 211 212 213 214 215 216 Source: Fiji Bureau of Statistics
Net % Next 3 months Next 12 months 1 8 6 4 2 BUSINESS SENTIMENTS Outlook for Investment (Plant & Machinery) 86 81 61 64 Jun.12 Dec.12 Jun.13 Dec.13 Jun.14 Dec.14 Jun.15 Dec.15 Jun.16 Outlook for Investment (Buildings) Net % Next 3 months Next 12 months 8 6 4 2 38 69 69 48 Jun.12 Dec.12 Jun.13 Dec.13 Jun.14 Dec.14 Jun.15 Dec.15 Jun.16 Source: Reserve Bank of Fiji
Labour market conditions remain favourable
RBF JOB ADVERTISEMENTS SURVEY No. 15, 15.1% 19.5% 1, 5, 1,984 12,638 24 25 26 27 28 29 21 211 212 213 214 215 216 Source: The Fiji Times
JOB ADVERTISEMENTS BY SECTORS No. Agriculture, Forestry & Fishing Manufacturing Construction Mining & Quarrying Electricity & Water Wholesale & Retail Trade & Restaurants & Hotels 12 1 8 6 4 2 Transport, Storage & Communication Community, Social & Personal Services Finance, Insurance, Real Estates & Business Services 2513 1159 11 278 1568 181 134 3899 1249 1755 728 594 21 211 212 213 214 215 216 Sources: The Fiji Times
EXTERNAL SECTOR External balances remain stable despite some deterioration in the trade account and lower than expected performances in the services and income account
MAJOR OET PAYMENTS Contribution by category 4. % 3.1 Jan- Dec 216: +8.3% Merchandise: +6.2% 2.3 1.8 2. 1.5 1.4.9.6.3.2. -.1 -.2 -.2-2. -4. Transport Equipment Duty Free Goods Unrequitted Transfers Food,Beverages & Tobacco Machinery & Elec. Equip Overseas Investment Income Travel Chemicals TCF Other Imports Merchanted Goods Government Imports -.9 Raw Materials -2.3 Mineral Fuels Source: OET
MAJOR OET RECEIPTS Contribution by category % Jan-Dec: +4.2% Merchandise: +.8% 4. 3.5 3. 2. 1.. 1.1.9.8.4.. -1. -.6 -.7-2. Capital Inflows*** Other Exports* Fish Mineral Water Travel TCF Total Reexports** -1.3 Gold Timber Sugar *Other Exports Includes: Ginger, Copra, Merchant Goods and other exports ** Total Re-exports includes: Mineral fuel and Others Source: OET ***Capital Inflows: Official Capital Transaction & Private Capital Transaction
PERSONAL REMITTANCES Lower than expected F$M 6 5 Annual 491.7 539.8 9.8% 559.6 5.2% F$M 5 45 4 35 Gifts, Maintenance & Donations Personal Receipts Immigrant Transfers 43.2 4 28.3% 3 3 25 2 2 15 1 1 5 8.5 29 21 211 212 213 214 215p 216p 217f -5 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16.1 Sources: OET & Macroeconomic Committee
FIJI DOLLAR/BASKET CURRENCIES.74 NZD Depreciation AUD.5 USD Appreciation EUR Depreciation JPY (rhs) 6.72.5.5.7.5 55.68.5.5.66.4.64.4 5.62.4.4.6 Dec-15 Jun-16 Dec-16.4 Dec-15 Jun-16 Dec-16 45 Dec-15 Jun-16 Dec-16 As @ 3 December 216
FINANCIAL CONDITIONS Slowdown in major credit aggregates General decline in lending rates and some upward movement in deposit rates Overall liquidity conditions remain adequate while levels have fallen
BROAD MONEY & CREDIT Monetary conditions remain favourable but credit growth slowing % Broad Money Domestic Credit Net Foreign Assets (RHS) % 3 14 12 2 1 8 6 1 7.6 4 5. 2 8.8-2 -4-1 -6 Nov-9 Nov-1 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Source: Reserve Bank of Fiji
DOMESTIC CREDIT Monetary conditions remain favourable but credit growth slowing % Domestic Credit Private Sector Credit 3 2 1 12.9 7.6-1 Nov-9 Nov-1 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Source: Reserve Bank of Fiji
COMMERCIAL BANKS ASSETS & DEPOSITS, NOV Both assets and deposits growth have slowed over the year F$M 9. Total Assets Annual % Change (RHS) Percent 3. F$M Time Deposits Savings Deposits 9. Demand Deposits Annual % Change Percent 3. 8. 7. 25. 8. 7. 25. 6. 2. 6. 2. 5. 4. 15. 5. 4. 15. 3. 1. 3. 1. 2. 1. 4. 5. 2. 1. 6.5 5... Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16.. Source: Reserve Bank of Fiji
COMMERCIAL BANKS OUTSTANDING LENDING, NOV Growth has been sluggish since January 216 F$M % 5933 6, 45 Total Y-O-Y 41.7 539 4 5, 4774 35 F$M 6, 5, Whlsale, Retail, Hotels & Rest. Private Individuals Manufacturing Real & Estate Transport & Storage 4774 539 5933 4, 3, 26.6 3 25 2 4, 3, Building & Construction Electricity, Gas & Water Profl & Busnes Services Others 2, 15.2 12.9 15 2, 1, 1.1 1 5 1, 26 27 28 29 21 211 212 213 214 215 216 From March 214 HFC lending is included in Commercial Banks lending. 26 27 28 29 21 211 212 213 214 215 216 Source: Reserve Bank of Fiji
LCIs OUTSTANDING LENDING, NOV Mostly driven by lending to private individuals and transport & storage sectors F$M % 5 Total Y-O-Y 6. 38. 4. 4 32.5 353 2. F$M 5 4 Wholesale, Retail, Hotels & Restaurants Private Individuals Manufacturing Real & Estate Transport & Storage Building & Construction Electricity, Gas & Water Professional & Business Services Others 353 3 256. 3 256 2 193-2. 2 193 1-55.3-4. -6. 1 26 27 28 29 21 211 212 213 214 215 216-8. 26 27 28 29 21 211 212 213 214 215 216 From March 214 HFC lending is included in Commercial Banks lending. Source: Reserve Bank of Fiji
INTEREST RATES Commercial Banks % Outstanding Lending Savings Deposit Time Deposit 1. 8. 6. 4. 5.74 2.94 2..98. Nov-8 Nov-9 Nov-1 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 % 16. Outstanding Lending Rate Time Deposit 12. 11.18 8. 4.7 4.. Nov-8 Nov-9 Nov-1 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 % 1. New Lending New Time Deposit 8. 5.38 6. 4. 2.64 2.. Jan-15 Jul-15 Jan-16 Jul-16 LCIs % 16. 12. New Lending rate New Time Deposit 8. 11.47 4. 2.54. Jan-15 Jan-16 Source: Reserve Bank of Fiji
BANKS LIQUIDITY Liquidity has declined but remains ample F$M 8 7 6 5 4 373.8 3 2 1 Jan-9 Jul-9 Jan-1 Jul-1 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 As at 16 th January 217
MONETARY POLICY: RBF s TWIN OBJECTIVES Maintain foreign reserves at adequate levels Keep inflation low and stable
INFLATION : 21-216 % 1. Monthly % Change Headline Inflation 8. 6. TC Winston 4. 3.9 2.. -2. -4. 21 211 212 213 214 215 216 *Others include Health, Communication. Furnishings, Hhld., Equip. Routine Hhld. maintenance, Recreation & Culture, Clothing & Footwear and Misc. Sources: Reserve Bank of Fiji and Fiji Bureau of Statistics
INFLATION Contribution to Inflation - December % 3.9% 3.2 3.5 3. 2.5 2. 1.5 1..5. -.5-1. Alcoholic Beverages, Tobacco & Narcotics 1.1 1. Education Food & Nonalcoholic Beverages.1 Restaraunts & Hotels -.2 Others* -.6 Housing, Water, Elec., Gas & other Fuels *Others include Health, Communication. Furnishings, Hhld., Equip. Routine Hhld. maintenance, Recreation & Culture, Clothing & Footwear and Misc. Sources: Reserve Bank of Fiji and Fiji Bureau of Statistics
DOMESTIC FUEL PRICES $/litre/kg 4.5 4. Gas 3.5 3. 2.5 2. 1.5 1. Petrol Diesel Kerosene 2.68 1.83 1.47 1.26.5. Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Source: Fiji Bureau of Statistics
INFLATION FORECAST 7. % Actual Outcomes (211 base) 217 Estimates based on Q4 216 data 6. 5.9 5. 4. 3. 2. 3.4 2.4 TC Winston 3.9 2.5 1.. -1. Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Source: Fiji Bureau of Statistics and Reserve Bank of Fiji
FOREIGN RESERVES F$M 2,5 Remain stable and adequate MORI 8. 2, Retained Imports Cover 1,922 1,96 1,825 7. 6. 1,5 1, Benchmark MORI Cover 5.4 5. 4.8 5. 4. 3. 5 2. 25 26 27 28 29 21 211 212 213 214 215 216p 23/1 217f 1. Source: Reserve Bank of Fiji
BALANCE OF RISKS Upside risks to global growth from both the US and China based on policy stimulus factors. Negative risks include inward-looking policies and protectionism, tighter in financial conditions, increased geopolitical tensions and severe China slowdown, sharp rise in commodity prices and currency changes. Domestically, downside risks from higher frequency of natural disasters and its impact on consumer/business confidence and other macro indicators. Progress of Government s structural reform agenda especially in the lead up to elections will continue to be monitored. Impact of risks on forecasts for reserves and inflation will be closely monitored.
SUMMARY The global outlook is for an improved 3.4 percent growth this year downside risks prevail 217 domestic growth forecast at 3.6 percent slight negative impact from TD4F Consumption and investment remain firm Labour market conditions are positive Liquidity conditions remain generally adequate while levels have declined Inflation is likely to rise slightly from the impact of the recent flooding before generally declining to around 2.5 percent by year end Foreign reserves are currently comfortable at $1,96 million (5.1 MORI) and expected to remain adequate in 217 Overall monetary and financial stability are expected to remain intact Macroeconomic policy remain supportive of the economic recovery and raising growth potential